Overview

• Public sector workers, including doctors, teachers, and armed forces personnel, will receive pay rises ranging from 3.2% to 4.5%, exceeding the 2.8% budgeted by the Treasury.
• The increases surpass the 3.5% inflation rate, marking real-terms pay gains, but unions argue they fail to address years of pay erosion.
• Departments are required to fund excess pay costs from existing budgets, with schools receiving a £615 million top-up but still expected to cover 1% of teacher pay rises through savings.
• Unions, including the British Medical Association and National Education Union, have warned of potential strikes if pay awards are not fully funded or fail to restore historical losses.
• The Institute for Fiscal Studies estimates the pay rises could add £2–3 billion in costs, raising concerns over potential tax increases or spending cuts in the upcoming spending review.